In order to have an open dialogue with the audience on the company's social networks, the Chairman of the Management Board answered subscribers' questions in a video interview format.

Dear subscribers, for your convenience, we have created a Youtube channel where we will post relevant and interesting videos. To view it, you need to follow this link: https://youtube.com/@kaz_engineering .

Below is a text transcript:

In the welcome speech of the Chairman, it was noted that we are always open to your questions and ready to answer them, however, we cannot provide answers to some questions that relate to state secrets in accordance with the Law.

1. What's new in the defense industry?

I will make a reservation right away that I cannot speak for the entire defense industry, since the Company is not an authorized body. The authorized body is the Ministry of Industry and Infrastructure Development of the Republic of Kazakhstan.

As far as I know, defense industry enterprises now include more than 40 companies: 11 of them are plants of NC Kazakhstan Engineering JSC.

According to our factories and what they produce, I can say:

1. In aviation, the repair and maintenance of military transport aircraft has been mastered. For example, last year the first C-check for the Airbus C-295 was carried out;

2. On the subject of unmanned aerial vehicles - we hope for contracts for the production of large strike and reconnaissance UAVs, for which we have an agreement with Turkish partners, a ready base and people. Our new reconnaissance UAV "Shagala-M" has passed the first tests as a communications repeater and is now undergoing additional tests at the test site with a payload - with a camera with a 30x zoom. The flight time from the battery is 180 minutes, the speed is 120 km / h, and the altitude is up to 4000 meters;

3. Last year, they began to assemble the civilian Airbus H-145 helicopter, it was shipped to customers in 2022 and 2023, but it has a modification, the military H-145M. We are not collecting yet, but we understand that we can;

4. For armored vehicles - we increased localization to 50% and reduce dependence on imported components due to our own production of components, we apply a cluster approach - that is, Kazakh manufacturers develop around the tank repair plant;

5. In shipbuilding - we are building a large 75-meter multifunctional ship of 650 tons;

6. In radio electronics - following the results of the visit of the Head of State to Turkey last year, a license was obtained, technology transfer, for DMR Tier 3 digital radio stations. At the end of last year, they were assembled and delivered to customers. At the exhibition on digitalization in Almaty, we also showed product samples.

7. For cartridges - they perfected pistol calibers 9x18 and 9x19, and also made their own 5.45 sleeve. We assembled and tested, but we are still setting up equipment and conducting commissioning for 7.62.

So far I've posted the latest. There are many plans for production within the framework of the "R&D Center" - from loitering ammunition (kamikaze drones), combat modules, tankettes, UAV boats, to the modernization of ammunition. However, this requires funding and volumes. We all understand that it is not profitable to create a new production for the sake of a small volume.

You probably read in the news that now the Ministry of Investment and Development of the Republic of Kazakhstan is creating the Defense Industry Development Fund, which will finance new developments of Kazakhstani manufacturers.

In any case, it must be understood that we do not determine how and on what the military will do their work, therefore any new product should be initiated primarily by the client (we will proceed only from the needs of our customers).

2. Does the Company's factories produce only military products?

No, 30% of products belong to the civilian direction. We participate on a common basis in tenders for computers, spare parts for railcars, service contracts, supply of helicopters for the Ministry of Emergency Situations, etc.

Last year we won about 6 billion tenge, this year there are also contracts. This is approximately 20-30% of our revenue. Now we are aiming to bring it up to 50%. But, of course, there is a lot of competition in the market, and domestic producers have priority only in Samruk-Kazyna tenders.

There is an opinion among the people that factories can easily switch to different production facilities in just a few days. They say that cigarettes and pasta with cartridges have the same diameter for a reason, and they can be produced simultaneously on the same machines. It is a myth.

3. How open is the data about the structure of JSC “NC “Kazakhstan Engineering”?

The website and social networks cover all the Company's news in terms of structure, appointments, and events. An open policy is pursued within the framework of corporate governance.

Now 69 people work in the central office. We are systematically reducing it, while strengthening the production staff in the field. About 3,800 people currently work in the structure of the entire holding.

4. Will the production be modernized or do all plants work according to the old scheme?

There is a standard working scheme for factories - it participates in a competition, receives an order, executes it or receives a state defense order.

In terms of technical equipment, several plants have been modernized in previous years:

• PZTM JSC - modern CNC machines, 3-4-5 axis, DMG Mori, Hyundai and others were purchased. We are now reviving production for the oil and gas sector using this equipment;
• JSC "ZIK" - modernization has been carried out, work is underway on new equipment, printed circuit boards and microcircuits are being produced.

5. Are there plans for joint development of the defense industry by the countries of Central Asia?

This issue is more related to the MIIR RK. But, I want to note that at the IDEX site in Abu Dhabi, our employees met with colleagues from Uzbekistan. We exchange experience, at the b2b level we work out various opportunities for cooperation. Also, negotiations are currently underway with Turkmenistan.

6. Do enterprises pay attention to the experience of the defense and civil industries of Western colleagues?

Within the framework of government commissions, we participate in negotiations, study the experience of different countries, including Western ones. If we take European countries, then this is, first of all, Yugoimport, a Serbian state-owned company, a kind of benchmark for me personally.

We are working with Siemens, Skoda and other companies whose civilian products we propose to master at our factories.

7. To which countries do the enterprises export their products?

Let me clarify right away that now the export is closed by the decision of the Government.

But, specifically, weapons and military equipment "Kazakhstan Engineering" has not exported and does not export.

In the future, I would like to introduce cartridges and small reconnaissance UAVs of domestic production to international markets. There is a prospect to sell target complexes - heat flow simulators and turbojet targets. On this occasion, we have an agreement with the Serbs. While we are working on cost reduction.

8. Does the Company sell its enterprises to Russia? (regarding Bid Notices)

The government has approved a list of certain objects for privatization. Our holding includes Tynys JSC, PZTM JSC, MZK JSC, 811 ARZ JSC and Munaimash JSC. These plants have great prospects in civil engineering.

In accordance with the law, we place information about auctions that is publicly available to any investor, and all of them are held on the gosreestr.kz website.

For example, the Russian company Elkam from Perm has already purchased the main share in Munaimash. In Kazakhstan, they are engaged in the production of SRP for the oil and gas sector.

9. Is there a demand from the Kazakh army for the products of factories?

Of course have. Not so long ago, the Minister of Defense personally visited our enterprises, where he assessed the progress of work and made his comments and suggestions.

Taking into account the opinion of our customers, we will improve, but this requires a constant dialogue between the customer and the supplier at the expert level.

10. Is there a possibility of employment at the factories of the military-industrial complex and how to do it? Are engineers needed?

Answering the following question in advance: yes, we need engineers. I initiated the creation of a simple and understandable single job site similar to Samruk-Kazyna ( qsamruk.kz ) for all our plants and affiliated companies. So far, all vacancies are published on the main website of the Company - ke.kz , where many proposals for engineering and technical specialties are posted.

There is a personnel problem, but we are actively developing cooperation with universities and colleges. The main task is to nurture young personnel for the industry.

11. What is the current situation with SMZ JSC?

In accordance with the law on rehabilitation and bankruptcy, the company has been on rehabilitation since February 2022 and is subject to the committee of creditors. The plant has orders, it is engaged in the production of hatch covers for gondola cars. The company has a Rehabilitation Manager who does not report directly to us. At the same time, the wages of employees, whose number is about 100-120 people, are constantly delayed.

Personally, I and my colleagues take the difficulties of the company's employees to heart. We help where we can. But, again, Kazakhstan Engineering has been removed from the management of the plant. The persons who led the enterprise to near bankruptcy, I think, will answer according to the law. Following the results of the audits, we applied to law enforcement agencies with relevant statements. Now both we and the plant staff are hoping for a sanitation procedure. The main requirement for sanatoriums is the repayment of debts on wages and accounts payable.

12. Does Paramount Engineering have any relation to the Group of Companies JSC NC Kazakhstan Engineering?

No. 7-8 years ago, Kazakhstan Engineering had a small indirect stake in this company, at the moment it is a completely private project.

13. What measures have been taken regarding the appeal of workers to MZK JSC?

We published an article on this situation in detail - https://ke.kz/ru/press-center/news/2326/ . The CEO also gave an interview about development plans (link - https://ke.kz/ru/press-center/news/2288/ ). A fuss was raised from the everyday situation that arose at the plant a couple of months ago on a day off, and someone tried to turn this situation against the new director. The initiators of this complaint and the culprit himself, who provoked the conflict outside of working hours, are no longer working. This situation is completely over.

To date, everything is stable at the plant. The security system has been strengthened. I was there recently and checked it out myself. And, it is worth noting, the security completely inspected me and checked everything.

Now we are trying to create better working conditions for the team and attract new civil projects. The structures of the Kazakhmys holding help us a lot in this - these are KLMZ and Smelting.

Regarding the location of the plant, on which questions often arise - the land belongs to the Akimat and we are there on a long-term lease, and accordingly, we do not decide anything.

JSC "NC "Kazakhstan Engineering" reminds that you can send your questions to the press service mail press@ke.kz or by phone: +7 (7172) 72 52 52 (ext. 1717) or direct to the Chairman of the Board t.abdrakhmanov @ke.kz .